17 ways to eliminate debt: Part 3
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In the first article of this series, “17 signs that you have too much debt”, readers were given the opportunity to analyze their current debt level. In the second article, the first eight of seventeen tips were provided to help you become debt-free. The remaining nine tips are provided here, in the last installment of the series.
- Bankruptcy – If other possibilities have been exhausted, consider filing for Chapter 7 or Chapter 13 bankruptcy. Both must be filed in Federal Court and require the payment of filing, attorney, and court fees. Bankruptcies require a visit to a credit counselor, at least six months before filing.
- Consider credit counseling - Credit counseling companies can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Do your research to ensure that the company is reputable. Begin by contacting your state attorney general’s office, local consumer protection agency or the National Foundation for Credit Counseling.
- Consolidate – Instead of paying multiple creditors, consolidate your debt into one loan. This will make it easier to manage your debt but does not necessarily mean a shorter repayment period or less interest.
- Refinance - Consider refinancing your home to lower the mortgage payment. Renters may opt for finding a less expensive place to rent.
- Prioritize your expenses – Focus on paying expenses that have a major consequence associated with delinquency. Ignoring payments on secured debt could mean the loss of your house or car. Disregarding back taxes may result in the seizure of your assets.
- Lower or eliminate your monthly bills – Adopt energy saving techniques to reduce energy bills. Decide which expenses are necessary. Eliminate or reduce expenses that are deemed unnecessary.
- Don’t waste a windfall - Apply any cash bonuses, monetary gifts, tax refunds, and incentives toward the debt repayment.
- Power Pay - Pay off one debt, and then apply the monthly payment from that debt to the next debt. Success of this option is dependent on not treating the additional funds as ‘extra’ but as a way to speed up the debt repayment process.
- Increase income – Find a way to bring more money into your household. This means obtaining an additional job, selling assets, or profiting from a skill.
Michigan State University Extension educators encourage you to be proactive as your debt issue is resolved. Methods described in parts 2 and 3 of this series, “17 ways to eliminate debt”, will help you control your finances. Please visit mimoneyhealth.org for credit and debt management tips.
Other Articles in this series:
